Correlation Between NAKED WINES and CSL

Can any of the company-specific risk be diversified away by investing in both NAKED WINES and CSL at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining NAKED WINES and CSL into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NAKED WINES PLC and CSL Limited, you can compare the effects of market volatilities on NAKED WINES and CSL and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in NAKED WINES with a short position of CSL. Check out your portfolio center. Please also check ongoing floating volatility patterns of NAKED WINES and CSL.

Diversification Opportunities for NAKED WINES and CSL

0.0

Correlation Coefficient

NAKED WINES  CSL

Pay attention - limited upside

The 3 months correlation between NAKED and CSL is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding NAKED WINES PLC and CSL Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSL Limited and NAKED WINES is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on NAKED WINES PLC are associated (or correlated) with CSL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSL Limited has no effect on the direction of NAKED WINES i.e., NAKED WINES and CSL go up and down completely randomly.

Pair Corralation between NAKED WINES and CSL

Assuming the 90 days horizon NAKED WINES PLC is expected to under-perform the CSL. In addition to that, NAKED WINES is 1.74 times more volatile than CSL Limited. It trades about -0.02 of its total potential returns per unit of risk. CSL Limited is currently generating about 0.08 per unit of volatility. If you would invest  13,272  in CSL Limited on April 20, 2025 and sell it today you would earn a total of  1,020  from holding CSL Limited or generate 7.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

NAKED WINES PLC  vs.  CSL Limited

NAKED WINES PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days NAKED WINES PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, NAKED WINES is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

CSL Limited

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CSL Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, CSL may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with NAKED WINES and CSL

The main advantage of trading using opposite NAKED WINES and CSL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NAKED WINES position performs unexpectedly, CSL can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in CSL will offset losses from the drop in CSL's long position.

The idea behind NAKED WINES PLC and CSL Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.